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Cloud Banking: Cloud Computing is the future of banking technology

It’s just a matter of time before all financial institutions move their technology to the cloud.

As banks adapt to market changes and new technology landscapes, cloud computing is playing a major role, providing alternative ways to access to core banking technology.
The spiraling costs of deploying and maintaining complex in-house legacy systems, along with the need to keep up with consumer expectations, are leading banks to increasingly demand innovative, flexible and cost-effective deployment models for their banking solutions.

Examining the challenges facing the banking industry as it seeks to maximise profitability in the digital age.

Cloud-based technologies are spreading rapidly through the business world: research firm IDC expects the cloud software market to be worth more than $100 billion by 2018, implying compound annual growth of more than 21 per cent, roughly five times faster than traditional packaged software. So it is clear that cloud computing is on course to become an everyday part of the way that companies operate in the digital economy.

The benefits that this model brings are well known: an enhanced customer experience, higher availability of critical systems, reduced up-front investment in IT systems and resources, and the potential for lower running costs.

The servers are about to stop getting cheaper the cost is increasing depends on the configuration and processor speed, the advantages of cloud computing in terms of cost and customer experience look more compelling than ever. In the banking market, however, the spread of cloud systems has been slower than elsewhere due to factors including concern about data security, uncertainty about the position regulators will take on cloud technologies and the challenge of managing migration from the in-house, legacy IT systems that currently run banks’ critical functions. According to a study by NTT Communications in 2013, 71 per cent of chief information officers in financial services companies said they would adopt cloud if their legacy IT were less complex.

Cloud software vendors like Temenos, along with platform partners and industry organizations, are working closely to address industry concerns. Coordinated efforts such as the Cloud Security Alliance and its Cloud Controls Matrix have set out industry principles for cloud vendors and assist prospective customers in assessing security risk at individual cloud providers. Cloud providers themselves are investing heavily in compliance and security expertise to the extent that many observers argue that a well-implemented migration to the cloud can result in higher levels of security than an in-house system, as well as access to real-time reporting mechanisms that are often superior.

Banks continue to be concerned that regulation remains unclear and in some instances, such as “data sovereignty”, the rules may impede their ability to work with cloud providers whose data centres are located in a different jurisdiction. Capturing the benefits of cloud technologies in this environment is a complex challenge. However, cloud-computing platform providers serving the banking market continue to place the requirements of financial regulators at the heart of their strategy. In the case of Temenos’s main platform partner, Microsoft Azure, customers are able to specify the geographic areas where their data is to be stored.


With Temenos, have the option to access the banking solutions via the cloud rather than installing in house. Cloud offers a scalable, manageable technology model that reduces IT hardware, maintenance and development costs.
This in turn gives the agility and flexibility to embrace new markets, new services and new channels, in line with consumer needs.


Temenos banking solutions are also now available via a cloud-based delivery model. Cloud offers a scalable, manageable technology model that reduces IT hardware, maintenance and development costs, which makes it the ideal deployment choice for a Model Bank.
New entrant banks are not generally burdened by complicated IT systems, and do not wish to be. By deploying core banking in the cloud, start-up banks are able to remain customer and market focused, while entrusting technology partners with IT service delivery.
The ability to outsource the delivery of banking technology as a cloud-based service means new entrant banks have access to a highly secure, always-on, industry-leading core banking technology, without the need for significant internal IT resources and expensive infrastructure of their own.

  • Established banks looking for innovative ways to increase return on equity and renew their focus on the customer proposition
  • New entrant banks and banks in emerging markets that wish to move fast without the burden of complicated IT systems
  • Microfinance institutions looking for cost-effective solutions that help them speed up the real economic benefit they deliver
  • Credit unions looking for the same standard of technology as banks, but without the complexity, enabling them to focus on their members and service
  • The rapid emergence of cloud computing is transforming the way financial institutions think about how they consume their IT resources. The advantages of cloud computing in terms of cost and customer experience look more compelling than ever
  • Until now, technology has typically been a costly hurdle for financial institutions. Cloud computing, which in the most basic of terms offers unlimited computing resource as a Software-as-a-Service (SaaS), is proven to directly translate to less upfront capital expense and reduced IT overheads, offering a simple alternative to accessing enterprise-level IT without the associated costs.
  • Recognizing the value of cloud computing, Temenos Software Services (TSS) has made a significant investment in its products to ensure they run natively on the Microsoft Windows Azure platform, Microsoft’s cloud computing environment. This development not only makes Temenos the first technology provider in the world to take a complete banking system to a public cloud environment, but puts into practice the real value cloud computing can bring to the financial world.

Celent has noted that there is an increase in demand for outsourced core banking systems in many geographies. Hosting Temenos Core Banking on Microsoft’s Azure platform gives financial institutions anywhere in the world the ability to deploy the system on a pay-per-use basis.”

Bart Narter – Senior Vice President – Celent

1. Fast to Deploy

Pre-configured, best practice-based products and processes to serve the needs of each banking sector in each geography available via the cloud, on a pay-per-use, monthly basis.

2. Future Proof

The solution is native to Windows Azure, allowing it to seamlessly integrate with new and existing Microsoft business applications

3. Help Included

Access to maintenance and support associated with the software is included in the monthly fee

4. Hassle Free

Close of business and routine tasks are managed by Temenos.
Safety in numbers
Security and compliance are major concerns when considering a move to cloud-based technology, which is why it is important to choose the right platform provider.
Temenos’ cloud banking software runs on Microsoft Azure, which has more than 240 million user accounts from companies and organizations in 127 countries. The decision to partner with Microsoft Azure as our cloud platform provider was based on its industry-leading levels of security and data protection along with the high levels of compliance and reporting that Azure users are able to achieve. Microsoft is itself subject to regular third-party audits and shares the findings with customers in order to help them meet their own compliance obligations.
Temenos is confident that by partnering with Azure, can give customers access to security, data protection and compliance processes that in many cases are better than those offered by their existing systems, while at the same time delivering the benefits and flexibility that a move to the cloud can provide.


❶No expensive Hardware High costs of running in-house data centers removed.
❷Scalability Resources can be scaled effectively and volume can be increased according to customer demand.
❸Right Price Consumption-based pricing model offers operational agility when you need it.
❹Viable Sustainable financial services is now a reality for emerging markets.
❺Fast and Flexible Financial institutions can become faster and more agile in creating new offerings.

They don’t have to worry about finding additional computing power.


The author is the Head of Information Technology at Bank Alfalah Limited 

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